With funding and counsel from Aegis, CWU, Inc. was able to expand operations and staffing and grow from $500,000 to over $20 million in revenues over a three year period.
Tampa, FL (PRWEB) October 29, 2014
Business financing experts at Aegis Business Credit http://aegisbusinesscredit.com/ today released guidance on how businesses without established bank credit can access financing to address growth opportunities, while at the same time build a solid financial foundation for better credit options down the road. Today’s challenging business credit market has forced many businesses and entrepreneurs to seek funding outside of traditional bank financing.
Purchase order financing, factoring and asset based lending are options Aegis offers to provide working capital for their clients.
- Purchase order financing works well for importers and distributors with confirmed orders from their customers, however is not appropriate if the business has thin profit margins on the order or if it is speculative in nature.
- Factoring works well for manufacturers, distributors, staffing and other service providers with a high level of weekly disbursements and collection cycles of 30 days or longer. In addition, factoring is an efficient means to fund growth for companies with seasonal demand, or products with healthy profit margins. Factoring provides advances on accounts receivable to bridge the gap between invoice date and actual collection, and allows companies with limited operating history or financial performance to obtain financing.
- Asset Based Lending or ABL provides a revolving line of credit based on working assets (accounts receivable and inventory) for companies with a relatively high level of sales growth, but less than 3 years performance history, typically required by banks. In a relatively short amount of time, ABL lines can be taken out by less expensive bank credit once companies demonstrate a trend of profitability.
- ABL and Factoring are typically more flexible than bank lines of credit because the amount of financing is driven by asset value (accounts receivable and inventory) as opposed to financial statement ratio limitations, typically imposed by banks.
Editors Note: Interviews with Aegis principles and a detailed financing applicability document are available upon request.
“When a business doesn’t yet qualify for bank financing, alternate funding options can look relatively expensive, however if funding proceeds are invested directly into the business trade cycle, purchase order financing, factoring or asset-based lending can make a lot of sense in terms of growing sales and profits.” James McArthur, who along with Michael Skat and Jill Alvarez compose Aegis’ team of managing directors, goes on to say, “If a business owner or manager determines the cost of not being able to fulfill an order or serve a customer outweighs the cost of funds, then alternative financing is a useful tool in moving a company up what we call 'The Pyramid of Funding.' The top of the 'pyramid,' the ultimate goal, is qualifying for bank financing. In other words, Aegis is the natural progression between equity and bank financing as companies grow.”
One client that successfully navigated Aegis’ ‘Pyramid of Funding’ is support services provider CWU, Inc. With funding and counsel from Aegis, CWU was able to expand operations and staffing and grow from $500,000 to over $20 million in revenues over a three year period. “It was a bank that originally referred us to Aegis,” said CWU President Chuck Jenkins. “The plan that they laid out for us at that time became the foundation that allowed us to grow and eventually ‘graduate’ by becoming bankable with a large bank. That growth was a direct result of the support we received from Aegis.”
“We work with our clients to help them develop and evolve to the next level,” said Aegis managing director Michael Skat. “We are immersed in their daily operations - we don’t just provide capital and walk away. We help our clients effectively put capital to work, and develop a framework and practices for long-term success. It is a remarkable achievement for a small business to advance to the point where it has the track record of success to appeal to a traditional bank. Essentially, our objective is to help our client no longer need our services. When that happens, it reinforces the value of what we offer.”
“We have relationships with banks that refer clients whose loan requests are denied,” Aegis managing director Jill Alvarez said. “Typically, banks deny loans because of lack of operating history or financial statement shortcomings. We work in partnership with the bank and, eventually, that bank can become the primary credit provider. That is our ultimate objective for our clients, and also what keeps banks referring clients to Aegis.”
About Aegis Business Credit
Aegis focuses on serving middle market companies mostly located in Florida and the Southeastern United States, providing financing in the $250,000 to $3 million range through asset based loans, factoring and purchase order financing. Managing Directors James McArthur, Michael Skat and Jill Alvarez have extensive experience in banking and business consulting and, under their leadership, Aegis is substantially more than just a source of capital to client companies.
Aegis Business Credit http://aegisbusinesscredit.com/
Interviews with Aegis principles and a detailed bullet-point list of financing applicability are available for media use upon request.